Kenshin Thoughts Posts

This is my response to this article posted on NPR. Here is my favorite quote from Janice Fraser, founder and CEO of LUXr, a product design firm for startups.

The worst moment is when you have to tell your staff. You have these people who, beyond reason, have put their trust in you. And you have to look them in the eye and say, ‘I’m sorry, this isn’t going to work.’ It’s always when the money’s running out … because you keep going until the money runs out. At the end, it’s just you and one or two other people, filing papers with the state and packing up the boxes. And that is not fun.

I’ve also been there once. It was the worst moment not just in my entrepreneurial career but in my entire life. However, human being is a creature that keeps learning whether you like it or not. I personally learned a lot from my own failure too. I mean, I had to.

Superior ecosystem of startup can be built with experienced entrepreneurs: those who succeeded and failed. If any region outside Silicon Valley were to replicate its success, it must have those who failed because they are the ones most likely succeed next and give down-to-earth advices to first time entrepreneurs.

Bringing a conference like FailCon to the region is necessary ingredient to build the ecosystem and I really encourage people to support idea of sharing their experiences. For those who have seen FailCon watch one of these YouTube clips.

I’m using a word “we” here because it’s work done by a team. However, truth is I wrote every piece of code by myself alone including UI and graphics. How did I do that while having full-time job? How did I manage to launch MVP (Minimum Viable Product) in short period of time? Well, here are few tips.

1) Spend two hours on coding before you go to work.
2) Test your app before you go to sleep.
3) Show what you have done during weekdays to your friend on Friday.
(Hence, you will receive some feedback by Monday morning if you are lucky.)

That’s all. Too simple and easy? Then try it for yourself. You will soon discover that two hours everyday add up to ten hours by Friday, which is almost equivalent to one full working day. Then you have another two full working days on weekend.

If you keep this behavior repeatedly and regularly, you are almost guaranteed at least three days a week to work on your product without scarifying your day job. Oh, there is one important message to those entrepreneurs out there looking for technical co-founder. Perhaps, this is considered as step zero.

0) Learn how to code.

I often see people building their product after they go home and working until midnight. That kind of behavior only works for night owls, and I usually don’t recommend it. Your brain is most awake in the morning so use it when it’s at the peak. Moreover, working until midnight isn’t good work-life balance at all.

Plus, I recommend you work out at least once or twice a week just to keep yourself refreshed.

Hugh Mason, co-founder of Singapore based startup accelerator JFDI.Asia, recently posted a wrap-up article of the accelerator’s 100 days bootcamp program. In the article he concluded his experience going through the first batch as the following, which I particularly wanted to quote.

Meng and I talk often about building the social capital – relationships, shared insights and know-how – that will create a vibrant, sustainable start-up ecosystem here in Asia. That’s our ambition. We will have succeeded when some of our start-ups founders become funders for the next generation. We hope that will happen in the next 3-5 years.

One thing I’m beginning to see often in these years is tendency many aspiring entrepreneurs, especially tech oriented folks in younger generation, seem to underestimate importance of social capital. They think shipping MVP and getting feedback from users is the fastest way to get funded and gain tractions.

In rare cases that kind of thinking works, but in reality it does not. Getting funded is not something you can achieve by making 1000+ online friends and poking them though Facebook, LinkedIn, and AngelList. Likewise, gaining traction does not equal to sending random press release and being featured on TechCrunch either.

First step of fund raising always starts with reaching out to prospective investors who share same vision followed by understanding personality of each investor as human being. From investor’s perspective this step is exactly the same. They do not make investment in your startup unless they fully understand your background, personality, and most importantly long term vision. This exact process is called building the social capital a.k.a. getting to know each other ‘offline.’

My most recent startup Coworkify was born out of my own necessity and I’m certain large portion of future workforce will become independent workers or fulltime employees working outside office environment. However, at the same I understand this is not type of investment opportunity every investor finds it interesting. Hence, building the social capital in my case requires lots of efforts, but definitely it’s worth doing it and I enjoy doing it a lot.

Startup is choice of lifestyle, certainly not way to make money. I don’t blame on people creating whatever version of Instagram, Pinterest or Etsy in niche segment. Chances are you won’t succeed by doing so. But even if you do succeed, make sure you have built both monetary capital as well as social capital along the course of your startup life because the former is temporary asset but the latter is life-long asset.

I suggested that you start building your own social capital if you haven’t done so. Do it globally so that your asset will become international by default. Tweeting and blogging in English might be a good starting point.

It’s been almost two weeks since I flew to Singapore. It was nothing but stunning experience to me as a first time visitor to the country.

After talking to many people who are local VCs, media folks, aspiring entrepreneurs, and startup lovers, I have gained quite amount of knowledge about startup scene in Singapore as well as SE Asia in general. Here is my quick summery.

1) Singapore is definitely a booming place but not quite there yet

Despite the fact I’ve seen enormous number of buildings being under construction in the city-state, startup culture there seems to be just started recently. Majority of people are there for established companies, mostly in finance related business.

2) Better place for securing angel/seed funding

Singapore is a far better place than in my hometown and possibly other parts of countries in SE Asia if you are up to angel/seed fund raising. There are relatively plenty of those funding available from both private and public sectors. A governmental institution like IDA has its own funding available to foreign startups.

3) Slight difficulty of securing post-seed funding

However, what I observed is a bit shortage of post-seed funding. Almost all startups are required to go global as quickly as possible if they are about to do next round of fund raising or look for further growth outside Singapore. I found it particularly true to software/IT related startups. Maybe one reasons is that there isn’t simply sufficient domestic market for consumer web services unless you are selling hardware that is designed for SE Asia market.

All VCs will expect startup to show that it can survive in global market. Otherwise, no post-seed funding available to the company. This was slightly different situation from Japan where software/IT startups can still aim at IPO just by doing business in domestic market only.

4) People’s mindset and resource availability

One of the biggest advantages of people in Singapore have is English speaking capability. This alone makes people there a whole lot more competitive in any industry than people in other countries of SE Asia. I must accept Japan is quite behind in this perspective.

However, I found it a little difficult to find the people with startup mindset who are willing to jump out from large entreprises and start new things at their own risks. Also, what’s even harder is availability of resources necessary for doing business as startup. Web developers and UI designers with proven track records are most difficult to find.

Of course, these people can go through extensive training or OJT by woking with experienced ones from Valley, but it might take some time. These resources can be outsourced to surrounding countries, but again they might not be up to the mark. Maybe this situation will soon change in the future.

5) Lots of possibilities

Last but not least is the fact that Singapore is definitely aiming at IT industry as next growth engine of the country. This is why DEMO Asia took place in Singapore as its first franchise in SE Asia. Also, the country is extremely open to foreign people and foreign businesses willing to do business there. Its diverse culture is plus if you want to create a team consisting of international people.

Having said all of this, I see LOTS of possibilities in Singapore in the near future. Hence, I plan to visit there a couple of more times. Hopefully, I wish myself being in a position doing something with that exciting country. At the end of the day, I really liked people living in or based out of Singapore.

This is my definition. Co-founder is someone who can understand your vision and give well-thought-out opinions that sometimes conflict with yours but help the startup differentiate itself from others in many ways.

On the other hand, a founding member is much more like operator who only believes in a vision thrown by the founder(s) and executes the tasks that are only relevant to his/her professional field.

The first thing you as entrepreneur have to do before formulating a startup is to find co-founders, not founding members. If you think you already have co-founders, think of above criteria and ask yourself a question “Do I really have a co-founder?”

If you find yourself making all strategic decisions alone or finding your prospective partners being not up to the mark where you cannot get the level of feedback you were expecting, you don’t have a real co-founder.

Your prospective partners might be able to give you lots of ideas and opinions, but these are so instant that you already thought of once or already have the answers.

I wouldn’t say it’s easy to find a co-founder who has ready-made ability to excel your level of thinking. However, I believe this is super important and very critical to the company’s success in the future.

What if you find yourself having only founding members? There are three ways to solve this. 1) Educate your founding members to become co-founders. 2) Look for someone else. 3) Dismiss your startup and start with other idea that is easier for people to understand.

At my recent startup I’m not following the latter two approaches yet. Instead, I’m sharing with my team members lots of information, sometimes too much, that I find useful on a daily basis. These information include updates from the competitors, new startups doing similar things, investor’s comment on industry trends, etc.

Someone might argue that giving too much information only introduces a chaos or creates an impression of the founder being not able to decide anything. I think that’s wrong because the environment surrounding a startup changes constantly and people in startup have to adjust them to new environment very quickly by consuming whatever information relevant to them. Otherwise, they will lose.

Startup Weekend is a great place to meet aspiring entrepreneurs and passionate people with startup mindset. Perhaps, at the same you have to realize that not all of them are qualified to be real co-founders especially at the moment you meet them for the first time.

Whether or not they can become real co-founder is completely up to you.

TechStars published few days ago a great post about practicing your pitch to the prospective investors. Here is a quick summary of what I learnt from Next Big Sound’s pitch.

Show that you have industry experience.
Co-founder & CEO Alex White worked at Universal Records, the world’s biggest music company.

Show that you experienced the same problem.
Alex showed his frustration by putting hands on his head.

A bit humor.
“# of girls in backstage” made the audience laugh a bit.

Start demo after 1 minute.
No more talking. Jump into to actual product demo.

Talk about the problem details.
Alex showed his product can produce better result than $4,000 worth industry report, which brings a bit ‘wow’ factor to his pitch.

Talk about your vision not just your product.

Don’t talk about the features you are going to implement in the future.
While there are many startups talking about their future milestones, Alex did not mention the things he is going to do when his startup gets some investment in the future.

Show that you are targeting a big market.
“It’s going to be difficult for the record labels to business without us (Next Big Sound)” gives the audience a very strong impression that they are following a big market and going to be the game changer.

Don’t talk about your competitors.
Simply investors are not interested in hearing the name of your competitors. They are interested in how you differentiated yourself from others.

Introduce your team members (with a bit humor)
“It’s cheap to keep us alive” = “We don’t need lots of investment to make this happen.” is excellent way of introducing your team members while giving an impression that you understand a ramen noodle startup model.

Show your customers.
Needless to say, this is the best way to gain your credibility.

Also interesting is that according to TechStars CEO David Cohen, Next Big Sound had a different product idea when they joined the program. This is another indication that TechStars is making the investment in people (I say people, not a single person) but not in ideas. I believe this is true to the most accelerator programs such as Y Combinator and 500 Startups.

Lastly, huge congrats to the folks at Next Big Sound who secured $1M seed funding after this pitch and the following $6.5M series A funding in January.

Children of Steve Jobs, a Japanese documentary program aired by NHK last week, had an unexpected content to me.

The program mainly focused on the students who attended the commencement at Stanford University and listened to Steve Jobs’ speech in 2005. While I thought the program woud be about how these students are proceeding with their dream after 6 years and how they are becoming successful today, I realized right after the introduction the focus of program was completely opposite.

It was a reality show of Stanford graduates who lost his job at Goldman Sachs because of financial crisis, who walks down the street with a “hire me” sign on him everyday, who went back to India in exchange for helping own country and family by giving up a promised position at Google, who started own business as a journalist after being fired.

I understand it’s arguable to call it that way, but the program was just about “No more American dream” and the content was devastating to me. We are seeing global crisis right now. America is facing nearly 9% unemployment rate, which roughly results in 1 out of 10 people having no job.

Silicon Vally is still the place for all tech entrepreneurs to offer lots of opportunities that no other places on the earth can’t compete. Stanford University is still the driving force behind Silicon Vally and people graduated from the university were thought to be all successful. However, this show reminds me of being successful from someone else’s perspective is not always equal to being successul in his/her own life value.

If working at Goldman Sachs and Google gives you a ‘dot’ which leads to your valuable connection in the future as Steve Jobs said during commencement, just go for it. If you are doing it just because everyone will think you are successful, please don’t. Life is too short to play that kind of worthless game.

Cost we paid was $295 including various transaction fees and cut for platform holder. It’s just $3 for each design. Although quality of every logo varies a lot, it’s still huge time saving to us. If we were to produce a hundred logos by ourselves, it would have costed us more.

During product building phase of startup an entrepreneur must focus on one thing, which is to build a product in the most efficient way in a short period of time. At this phase he should not spend time on building a great team for future growth. All of his energy has to go into a product and people who can produce it.

Ryuichi Nishida, a writer at TechCrunch Japan, published this great post (in Japanese) warning the domestic entrepreneurs about taking the words directly out of TechCrunch without understanding fondamental differences between Japan and Silicon Valley.

In his post he mentioned the below points often mistaken by the aspiring entrepreneurs so he gave thoughtful advises to them.

1) Far less acquisition activity in Japan (hence it is not a practical exit option.)
2) Convertible Notes should be treated as debt. They have greater benefits for investors, not for entrepreneurs in general.
3) No need to copy Silicon Valley businesses because you as a domestic entrepreneur don’t have to.

While I agree with all three points, I also saw countless number of domestic entrepreneurs in the past trying to apply the things that are only valid in the Valley. These entrepreneurs almost always have a great vision in the beginning just like ones in the Valley, but they will soon or later realize their businesses won’t go anywhere due to lack of available exits. This is particularly true if the business has no revenue stream.

In the Valley not all startups have revenue stream. Perhaps they still do successful exit mostly through acquisition by the larger business entities or sometimes by their direct/indirect competitors. I often brought up GroupMe as an example of recent startup which did very successful exit without making a dime in revenue. This kind of exit is only applicable to the startups based out of the Valley or by the acquirers based in the same area.

Now taking a look at our startup project Coworkify we are currently building the entire service in English. If we were to incorporate with some exit strategy in short period of time, we will choose the places other than Japan. Why? It’s because of the above points mentioned by Mr. Nishida.

Although we believe our service is unique and definitely needed by the certain amount of people, it doesn’t mean we can follow the same path as those startups in the Valley. If we want to do things like a Valley startup, we have to become a real Valley startup. Otherwise, what you read at TechCrunch has nothing to do with your startup.

Lastly, Mr. Nishida concluded his post by saying the domestic entrepreneurs should focus on the kind of services that solve a real problem instead of producing gourmet, fashion, social apps that already exist. Needless to say, we are focusing on the former.

Fred Wilson wrote this great post few days ago about the management team at the first stage of startup, what he calls Product Building stage.

Although number of team members and co-founders may vary depending on scale of your product, I personally had to go through the similar process recently and reduced our team size from 9 to 4 people as a result.

A couple of weeks ago I heard from someone who attended the previous Startup Weekend saying that our team was just too large so that we won’t make it to the presentation on the last day of the event. I initially had same feeling but somehow we managed it while letting everyone join our team without questioning anything about his/her skills and without caring about overlapping between people.

Now that our project is at Product Building stage where everyone in the team must have certain skills and responsibilities not overlapping with each other. For this particular reason I had to make a tough decision to say “sorry, we will come back to you when we are at a certain phase in the future.”

This is not easy thing to say, especially to the people who were around us for a while as team members. However, at the same time it is true that overlapped skills and responsibilities in such a small team will create unnecessary communication effort and lots of frictions between team members which only you can resolve most of the time.

As a startup leader you don’t want to spend your time talking to team members just to make sure they don’t overlap each other. You want to focus on building a great product. If you find yourself spending too much time on communicating team members, maybe you’d better start thinking of solving the root cause of your problem.

Here is our current team structure and role of each person. 1) Frontend and backend developer (which is me) 2) UI/UX specialist 3) PR/Marketing 4) Business development and overall strategy. I’m hoping we won’t have to reduce number of people at least until product launch at DEMO.